SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934 Date of Report (date of earliest event reported): July 11, 2002 XEROX CORPORATION (Exact name of registrant as specified in its charter) New York 1-4471 16-0468020 (State or other (Commission File Number) (IRS Employer jurisdiction of Identification No.) incorporation) 800 Long Ridge Road P. O. Box 1600 Stamford, Connecticut 06904-1600 (Address of principal executive offices)(Zip Code) Registrant's telephone number, including area code: (203) 968-3000 Not Applicable (Former name or former address, if changed since last report)
Item 5. Other Events. On April 11, 2002, Registrant reached a settlement with the Securities and Exchange Commission (SEC) relating to matters that had been under investigation by the SEC since June 2000. In connection with the settlement, Registrant agreed to restate its financial statements as of and for the years ended December 31, 1997 through 2000 and to undertake a review of its material internal controls and accounting policies. Registrant also restated its consolidated financial statements for the first three quarters of 2001. The restated consolidated financial statements were filed with the SEC in Registrant's Annual Report on Form 10-K for the Year Ended December 31, 2001 ("2001 Form 10-K Report") and Registrant's Quarterly Report on Form 10-Q for the Quarter Ended March 31, 2002 ("March 2002 Form 10-Q Report"). The restated consolidated financial statements reflect adjustments which are corrections of errors made in the application of U.S. generally accepted accounting principles (GAAP) and include (i) adjustments related to the application of the provisions of Statement of Financial Accounting Standards No. 13 "Accounting for Leases" and (ii) adjustments that arose as a result of other errors in the application of GAAP. All dollar and per share amounts have been revised, as appropriate for the effects of such restatement. This Current Report on Form 8-K provides key financial data (unaudited) for each of the quarters in the year ended December 31, 2001 and for the quarter ended March 31, 2002 which is supplemental to the financial data contained in Registrant's 2001 Form 10-K Report and Registrant's March 2002 Form 10-Q Report. FIVE QUARTERS IN REVIEW (Unaudited) In millions, except per-share data 2001 2002 ------------------------------------------------------- ---------- First Second Third Fourth Full First Quarter Quarter Quarter Quarter Year Quarter ---------- --------- --------- --------- ------ ---------- Restated Restated Restated Operations: Sales $ 1,865 $ 1,858 $ 1,708 $ 2,012 $ 7,443 $ 1,583 Service, outsourcing and rentals 2,134 2,139 2,071 2,092 8,436 2,011 Finance income 292 286 273 278 1,129 264 --------- -------- -------- -------- -------- ---------- Total Revenues $ 4,291 $ 4,283 $ 4,052 $ 4,382 $17,008 $ 3,858 ========= ======== ======== ======== ======== ========== Cost of sales (1) $ 1,377 $ 1,301 $ 1,239 $ 1,253 $ 5,170 $ 1,025 Cost of service, outsourcing and rentals 1,292 1,183 1,183 1,222 4,880 1,159 Equipment financing interest (2) 130 125 107 95 457 92 --------- -------- -------- -------- -------- ---------- Total Cost of Sales (1) $ 2,799 $ 2,609 $ 2,529 $ 2,570 $10,507 $ 2,276 ========= ======== ======== ======== ======== ========== Research and development expenses $ 251 $ 257 $ 257 $ 232 $ 997 $ 230 Selling, administrative and general expenses (3) 1,149 1,220 1,175 1,184 4,728 1,169 Restructuring and asset impairment charges 129 295 63 228 715 146 Gain on sale of half of interest in Fuji Xerox (769) -- -- (4) (773) -- Other expenses, net 93 184 132 64 473 90 Currency (gains) losses, net (4) (64) 13 59 (37) (29) 24 Non-financing interest expense (2) (4) 155 141 48 102 446 81 (Loss) Income before income taxes (benefits), equity income, minorities' interests, extraordinary gain, and cumulative effect of change in accounting principle 646 (272) (98) 89 365 (53) (Loss) Income before extraordinary gain and cumulative effect of change in accounting principle 212 (119) (33) (169) (109) (46) Net (loss) income $ 227 $ (101) $ (32) $ (165) $ (71) $ (46) Financial Position: Cash and cash equivalents $ 2,777 $ 2,176 $ 2,425 $ 3,990 $ 3,990 $ 4,747 Accounts receivable, net 2,105 2,040 2,043 1,896 1,896 1,882 Finance receivables, net 10,393 9,866 9,885 9,678 9,678 9,397 Inventories 1,811 1,625 1,594 1,364 1,364 1,283 Total Assets 28,234 26,539 26,934 27,689 27,689 27,755
2001 2002 ------------------------------------------------------------------- First Second Third Fourth Full First Quarter Quarter Quarter Quarter Year Quarter -------- --------- -------- ----------- ----------- ---------- Restated Restated Restated Consolidated Capitalization: - ---------------------------- Short-term debt and current portion of long-term debt $ 3,303 $ 3,035 $ 3,168 $ 6,637 $ 6,637 $ 6,704 Long-term debt 14,701 13,547 13,593 10,128 10,128 10,712 --------- -------- -------- -------- -------- ---------- Total Debt $ 18,004 $16,582 $16,761 $16,765 $16,765 $ 17,416 ========= ======== ======== ======== ======== ========== Common Shareholders' Equity $ 1,962 $ 1,958 $ 1,978 $ 1,820 $ 1,820 $ 1,713 Total Capitalization(5) $ 21,132 $19,692 $19,882 $20,815 $20,815 $ 21,353 Common Shares Outstanding (in millions): Average common shares outstanding during the period for basic (loss) earnings per share 680 701 718 722 704 726 Average common shares outstanding during the period for diluted (loss) earnings per share 782 701 718 722 704 726 (Loss) Earnings per Share: - -------------------------- Basic (loss) earnings per Share $ 0.32 $(0.14) $ (0.05) $ (0.23) $ (0.12) $(0.06) Diluted (loss) earnings per Share $ 0.29 $(0.14) $ (0.05) $ (0.23) $ (0.12) $(0.06) Other data: Restructuring and asset impairment charges (after taxes) $ 81 $ 222 $ 47 $ 157 $ 507 $ 101 Gain on sale of half of interest in Fuji Xerox (after taxes) (300) -- -- (4) (304) -- Currency (gains) losses, net (after taxes) (44) 10 38 (25) (21) 22 (1) Includes inventory charges of $0, $24, $5, $13 and $2, respectively associated with restructuring actions. These are in addition to all other inventory charges occurring in the period. (2) Third quarter 2001 interest expense includes a net gain of $46 from the mark-to-market valuation of interest rate swaps required to be recorded as a result of applying Statement of Financial Accounting Standard No. 133 "Derivatives and Hedging" (SFAS No. 133) accounting rules. Similarly, fourth quarter 2001 interest expense reflects a net loss of $17 from the mark-to-market valuation of interest rate swaps in accordance with SFAS No. 133 accounting rules. The overall decline in interest expense beginning in the third quarter 2001 primarily reflects lower interest rates as compared to prior periods. (3) Includes bad debt expense of $84, $93, $151, $110 and $103, respectively. (4) Included in Other expenses, net. (5) Calculated as the total of short term debt and current portion of long term debt, long term debt, deferred ESOP benefits, minorities' interest in equity of subsidiaries, obligation for equity put options, Company-obligated, mandatorily redeemable preferred securities of subsidiary trusts holding solely subordinated debentures of the Company, preferred stock, common stock, including additional paid in capital, retained earnings and accumulated other comprehensive loss. Segment data is as follows: 2001 (6) 2002 ---------------------------------------------- ------- First Second Third Fourth Full First Quarter Quarter Quarter Quarter Year Quarter ------- ------- ------- ------- ---- ------- Revenue: - -------- Production $1,449 $1,484 $1,391 $1,559 $ 5,883 $1,318 Office 1,741 1,732 1,641 1,796 6,910 1,638 DMO 504 512 487 523 2,026 448 SOHO 123 96 111 80 410 70 Other 474 459 422 424 1,779 384 ------ ------ ------ ------ ------- ------ Total Revenue $4,291 $4,283 $4,052 $4,382 $17,008 $3,858 ====== ====== ====== ====== ======= ====== Segment profit (loss): - ---------------------- Production $ 112 $ 101 $ 73 $ 180 $ 466 $ 105 Office 47 98 63 157 365 91 DMO (70) 5 (12) (48) (125) (5) SOHO (79) (84) (54) 22 (195) 27 Other (1) (42) (101) 35 (109) (112) ---- ---- --- ---- ---- ---- Total segment profit (loss) $ 9 $ 78 $ (31) $ 346 $ 402 $ 106 ====== ====== ====== ====== ======= ====== Segment margin: - --------------- Production 7.7% 6.8% 5.2% 11.5% 7.9% 8.0% Office 2.7% 5.7% 3.8% 8.7% 5.3% 5.6% DMO (13.9)% 1.0% (2.5)% (9.2)% (6.2)% (1.1)% SOHO (64.2)% (87.5)% (48.6)% 27.5% (47.6)% 38.6% Other (0.2)% (9.2)% (23.9)% 8.3% (6.1)% (29.2)% Total segment margin 0.2% 1.8% (0.8)% 7.9% 2.4% 2.7% (6) For purposes of comparability, 2001 segment information has been adjusted to reflect a change in measurement of segment profit or loss that was enacted in 2002. The nature of the changes related primarily to corporate expense and other allocations associated with internal reorganizations made in 2002, as well as decisions concerning direct applicability of certain overhead expenses to the segments. The adjustments increased (decreased) full year 2001 revenues as follows: Production-($16), Office - ($16), DMO - ($1), SOHO -$3 and Other- $30. The full year 2001 segment profit was increased (decreased) as follows: Production - $12, Office - $24, DMO - $32, SOHO - $2 and Other - ($70).
SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, Registrant has duly authorized this report to be signed on its behalf by the undersigned duly authorized. XEROX CORPORATION /s/ GARY R. KABURECK ---------------------------- By: GARY R. KABURECK Assistant Controller and Chief Accounting Officer Date: July 11, 2002